Consumers in Spain put brakes on spending

MADRID: Spaniards are buying fewer cars, fewer clothes and even cutting back on smoking, as a grinding recession and rising unemployment force them to slash spending, dealing a severe blow to manufacturers and shops.

Last week, the headlines surrounding big brands such as Spanish fashion retailer Blanco and tobacco group Altadis highlighted the fallout of the consumer slump in Spain.

Blanco, a budget high street chain which has 300 shops in 27 countries and 2,000 employees, said that it had filed for insolvency due to “the difficult economic situation facing the country which has touched consumer spending and credit markets very specifically.”

Clothing sales in Spain are down by 8.7 percent this year, the seventh consecutive year that they have fallen, according to clothing retail lobby group Acotex.

Altadis, a French-Spanish offshoot of British-based Imperial Tobacco, then announced that it would axe nearly 10 percent of its staff in Spain as cigarette sales slumped in the face of no-smoking bans and a booming black market in the recession-hit country. The company said that its cigarette sales had gone up in smoke in Spain, with volumes slumping by 40 percent in the past four years.

It blamed the drop on the smoking ban, which came into effect in Spanish cafes and restaurants on January 1, 2011, as well as “a considerable increase in illegal sales, provoked largely by the situation of economic crisis.”

Sales of tobacco have plunged from 4.51 billion packages in 2008, the year the country’s economic downturn began, to 2.67 billion packages in 2012.

“In Spain, we are not only facing a financial, economic and employment crisis, it is also a crisis in confidence and that is reflected in consumer spending, which does not stop falling,” said Celia Ferrero, vice-president of ATA, an association that represents small entrepreneurs.

Spain, the eurozone’s fourth-largest economy, is still struggling to overcome the aftermath of a property bubble that imploded in 2008, destroying millions of jobs and sending debt levels soaring.

The jobless rate has rocketed to a record 27 percent and this, combined with sharp government spending cuts and tax hikes aimed at slashing a ballooning public deficit, has led consumers to tighten their wallets.